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The Heart Of Dividend Growth Investing - Bucket Investing Part 3

May 05, 2021 9:23 AM ET3 Comments
Wyo Investments profile picture
Wyo Investments


  • Part 3 of this multipart series covers the "Core bucket" for dividend growth investors.
  • The core bucket is made up of the highest quality stocks and is the backbone of a dividend growth investor's portfolio.
  • This bucket can be tiered to acknowledge the variation in quality across companies and to help determine which stocks need more attention.

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This is part 3 of a multipart series on using buckets to define a dividend growth portfolio. Part 1 covered an introduction to using buckets in a dividend growth portfolio and why it makes

This article was written by

Wyo Investments profile picture
I spent 20 years in the natural resource sector in project development, project management, and business development. I typically invest in dividend growth stocks, although I do have an large investment property portfolio. In the past I have invested using momentum strategies, option strategies, and focused on growth stocks. However in 2009 I converted almost entirely to dividend growth investing as I found this was most in line with my investing goals, and allowed me to sleep easy at night! While I "retired" at 42, so I could be home to take my daughter to school, pick her up, and attend her events every day.  My many areas of investing allowed me to do this relatively comfortably, although time will tell if I stay retired. UPDATE: I recently accepted a position, not because I had to, but because I wanted to. It's amazing the difference work is when you are choosing to be there, rather than having to work.

Analyst’s Disclosure: I am/we are long AAPL, ABBV, ABT, AMGN, BLK, CAH, CLX, CVS, HCSG, INTC, JNJ, LOW, MDT, MO, MSA, PFE, TXN, USB, WBA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

Will you write an article about allocation?
Something like:

High yield 15%
Core dividend growth 50%
High dividend growth 15%
Non-dividend 20%
Wyo Investments profile picture
@braeboe Thanks for the input! I have been trying to figure out how to do this, as it is highly dependent on an individuals goals, how soon they plan to start withdrawing dividends and risk tolerance. I'm attempting (poorly I guess) to write this series out in a way to allow an investor to consider the factors that go into determining the size of each bucket to reach their own goals. I'll look at doing some specific examples of what a portfolio might look like with different goals and starting points. I do share how I currently distribute my buckets in the introduction article to this series: seekingalpha.com/... but its pretty specific to my current goals.

Also while I am currently doing 10% of new investments into non-dividend paying companies, its important to note that 95% of this goes into companies that have the potential to pay dividends in the future due to enormous cash flows, such as Google, Amazon, Adobe and Intuitive Surgical. I put very, very little into speculative companies. This is because my goals are strictly income orientated and speculative companies are very unlikely to make a profit anytime soon, let alone pay a dividend. Other investors who really feel like they are missing out (FOMO) may want to gamble on more speculative companies. This is where having a strict rule comes into play, because it easy to lose sight of the overall goal with these types of investments.
You say “These are companies a DGI investor plans to hold forever.” I agree, and in fact every stock I buy goes into my 'plan to hold forever' bucket, though I know that I'll end up selling some. I like most of your list and I hold a few of them.

My other buckets contain mutual funds/ETFs and cash.
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